TMI Blog2023 (9) TMI 753X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the previous assessment year and the amounts were lying in the bank accounts of the minors unused. Thus, the minors offered loans to the assessee out of their savings - HELD THAT:- It is an admitted fact that the minors have been receiving gifts in earlier years. In fact, there was no debit entry in their SB account. To offer a loan, credit balances in their accounts are required. Out of their bank balance, the minors have offered loans to the assessee. When they have sufficient credit in their accounts, creditworthiness cannot be questioned. More so, both the minors have furnished their income tax returns, which were duly agreed by the Department. Thus, we are of the opinion that the ld. CIT(A) was not correct to held that the minors have no independent source of funds to advance the loans. Accordingly, we reverse the orders of authorities below and delete the addition as well as interest relating thereon - Thus, the ground raised by the assessee is allowed. Addition on account of factory maintenance expenditure - HELD THAT:- Once the assessee has furnished detailed confirmation of payment on accounts of factory maintenance expenses, to prove the identity of Shri S. Srin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is dismissed. Partly confirming the computation of income from house property - HELD THAT:- assessee claimed that the property was vacant for the whole year and not let out for any period during the year, the ld. CIT(A) opined that the assessee may not be entitled to any relief and has to pay tax on the notional rent. Accordingly, the ld. CIT(A) confirmed the findings of the Assessing Officer that the notional rent has to be assessed as property income. However, since the Assessing Officer has assessed the entire gross rental of ₹. 5.40,000/- as income without giving statutory deduction at 30% of the annual value, the ld. CIT(A) has confirmed the addition to the extent of ₹. 3,78,000/- after granting statutory deduction of ₹. 1,62,000/- being 30% of ₹. 5,40,000/-. Before us, the ld. Counsel for the assessee could not controvert the above findings of the ld. CIT(A) and accordingly, the addition confirmed by the ld. CIT(A) stands sustained. Appeal filed by the assessee is partly allowed and the appeal of the Revenue is dismissed. - Shri V. Durga Rao, Judicial Member And Shri Manjunatha, G. Accountant Member For the Assessee : Shri N. Arjun Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad even appeared before the Assessing Officer. The Assessing Officer has observed that unfortunately, on a deep scrutiny into the pile of documents furnished by the AR and the assessee, in assessment proceedings, clearly revealed the manipulations and the manner in which cash was deposited in the bank accounts of the above mentioned depositors immediately prior to issuing the cheques to the assessee. Merely because the transactions were through the bank account, accordingly, it cannot be presumed that the transactions were genuine. Mere payment by account payee cheque is not sacrosanct nor can it make a non-genuine transaction genuine. Before the Assessing Officer, the assessee also agitated against the enquiry into the source of source of the loans by relying on some court decision during the course of assessment proceedings. Since the assessee has not established the creditworthiness of the depositors/lenders and genuineness of the transactions and that the loans of ₹. 3,07,71,007/- represent bogus accommodation entries where the assessee had schemed to use his family members and their bank accounts to generate capital for the business, the Assessing Officer issued show-cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sponse to the summons issued and statement recorded. The Assessing Officer disbelieved the credits was that the creditor s income shown was meagre and presumed that they would not have been in a position to advance such huge sums. The creditors have explained that the loans were undisputedly advanced from borrowals from Citicorp Finance (India) Ltd. by pledging the shares. The Assessing Officer further called upon the creditors to explain the sources for the amount invested in shares which they explained as the immediate source for the loan and they were all by RTGS transfers. All the creditors were having PAN and admitted the transactions and therefore the initial onus on the assessee to prove the identity of the creditors and their creditworthiness and genuineness of transactions was discharged. In view of the above facts and circumstances and after verifying the details of the assessee, the ld. CIT(A) was of the opinion that there was no case for the Assessing Officer to treat the credits as unexplained under section 68 of the Act without disproving the assessee s contention, which the Assessing Officer failed to do. Accordingly, the ld. CIT(A) deleted the addition of ₹. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of the creditors and their creditworthiness and genuineness of the transactions, the ld. CIT(A) deleted the addition. 6.3 On perusal of the assessment order, we find that the Assessing Officer has confirmed that the above five loan creditors are income tax assessees, have filed their returns of income for the assessment year 2014-15 and also the transactions were made through banking channel by RTGS. On further enquiry made by the Assessing Officer through summons under section 131 of the Act towards source of source, they have given the following statements: Borrowed revolving loan facility against pledging of shares with Citicorp Finance (India) Limited and had advanced the same to Smt. Devakumari . We have also perused the detailed paper book filed by the assessee containing reply to the objections of the Assessing Officer filing copies of the ITR, copies of bank pass book, copies of the Revolving loan facilitycum- pledge etc., running from page No. 81 to 545. With regard to creditworthiness of the creditors, the assessee filed copies of agreement with Citicorp Finance (India) Ltd. at paper book page Nos. 113 to 123 in respect of B. Suresh Babu, B. Rani at page 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax return, etc. filed in the form of paper book and prayed for deleting the addition made by the Assessing Officer and confirmed by the ld. CIT(A). 7.2 On the other hand, the ld. DR strongly supported the order of the ld. CIT(A) on this issue. 7.3 We have considered the rival contentions. The assessee has received loan from the minors S. Goutham Raj and B. Satvika of ₹. 13,37,982/- and ₹. 9,33,025/- respectively. It is an admitted fact that the minors have been receiving gifts in earlier years. In fact, there was no debit entry in their SB account. To offer a loan, credit balances in their accounts are required. Out of their bank balance, the minors have offered loans to the assessee. When they have sufficient credit in their accounts, creditworthiness cannot be questioned. More so, both the minors have furnished their income tax returns, which were duly agreed by the Department. Thus, we are of the opinion that the ld. CIT(A) was not correct to held that the minors have no independent source of funds to advance the loans. Accordingly, we reverse the orders of authorities below and delete the addition of ₹. 22,71,007/- as well as interest relating thereon of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayaka Agencies, the Inspector should have made enquiry. Before the Assessing Officer the assessee has submitted that the said person Mr. S. Srinivasalu was doing business individually in the relevant previous year and subsequently doing the business in the name of Sri Vinayaka Agencies. However, we are unable to understand as to why the Assessing Officer has not issued any summon under section 131 of the Act to Shri S. Srinivasalu to appear before him and to record the statements. It appears that the ld. CIT(A) has also not bothered to make enquiry before confirming the addition. Once the assessee has furnished detailed confirmation of payment of ₹. 8,83,600/- on accounts of factory maintenance expenses, to prove the identity of Shri S. Srinivasalu, copy of Aadhar, PAN, ITR, etc. were brought on record, we are of the considered opinion that the assessee has discharged the primary onus cast upon her and thus, the above addition made by the Assessing Officer is liable to be deleted. Accordingly, The addition made on account of disallowance of factory maintenance expenses at ₹ 8,83,600/- stands deleted and the ground raised by the assessee is allowed. 9. The next ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8(2) of the Act, where an asset was not exclusively used for the purpose of business, the deduction under section 32 of the Act should also be restricted to a fair proportionate part thereof. In this case, 10% of the expenditure on maintenance of car was disallowed towards personal use, thereby, the ld. CIT(A) has observed that the Assessing Officer was justified in disallowing 10% of the depreciation on car. Since the assessee has not given the correct depreciation on car claimed, the Assessing Officer has taken 10% of the total depreciation claimed under the 15% block and disallowed the depreciation. Accordingly, the ld. CIT(A) confirmed the disallowance of ₹. 2,27,817/- under depreciation and total disallowance at ₹. 3,00,7230/- under car maintenance expenses. We find no infirmity in the above findings of the ld. CIT(A) and thus, the ground raise by the assessee is dismissed. 11. The next ground raised in the appeal of the assessee relates to confirmation of addition of ₹. 2,00,000/- on account of insufficient drawings over and above the addition made by the Assessing Officer. Upon verification of the balance sheet and P L account of the assessee for the AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and circumstances of the case. Thus, we find no reason to interfere with the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the assessee is dismissed. 12. The last ground raised in the appeal of the assessee relates to partly confirming the computation of income from house property of ₹. 3,78,000/-. On a perusal of the computation of income statement filed by the assessee, the Assessing Officer has noticed that the property in Triplicane was shown with a rental value of ₹. 6,45,740/- for the year (break-up of the rental income was produced). On verification, the Assessing Officer found that the assessee had offered rental income, from the apartment she owned from 5 tenants only. The assessee has declared six flats to be vacant in that ground +3 floor apartments. After discussing with the AR of the assessee, the Assessing Officer has ascertained that the property was occupied for own use in the preceding PY 2013-14 and the same was not let out during the year. In order to verify the genuineness of the claim, assessee was asked to produce the EB bills and EB cards for the six vacant flats. However, the assessee could not f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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